The economic think tank, National Council of Applied Economic Research (NCAER), which had recently projected India’s growth rate at 7.6 per cent for 2016-17, now lowered India’s gross domestic product (GDP) growth projection to 6.9 per cent for the fiscal 2016-17, on account of government’s demonetisation drive to curb black money and corruption. However, NCAER expects the growth rate to rebound to 7.3 per cent for 2017-18.
While noting that the ban on high value currency notes with effect from the midnight of November 8, 2016 took the domestic economy by surprise, raising fresh anxieties about economic recovery, leading to a downward forecast, NCAER has also blamed global economic uncertainty for the downward forecast.
The economic think tank further said that Gross Value Added (GVA) at Basic Prices at constant (2011-12) prices is predicted to grow at 6.3 per cent in 2016-17 and 7 per cent in 2017-18. Real Agriculture GVA is forecast to grow at 3.7 per cent, real Industry GVA at 5.5 per cent and real Services GVA at 7.3 per cent in 2016-17. Further it has projected that Wholesale Price Index (WPI) inflation will remain low in 2016-17 that is at 3.6 per cent. However, it is projected to accelerate in 2017–18 due to rising crude oil inflation. The report also said that the performance of the external sector in the third quarter of 2016-17 has shown signs of improvement. Merchandise exports grew for the fifth consecutive month in January 2017, up by 4.3 percent.